Mandalay gives cold shoulder to MGM

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Mandalay Resort Group has rejected MGM Mirage's $US4.85 billion ($7 billion) cash buy-out offer that would have created the largest casino company in the world, saying the $US68 per share bid was insufficient.

"The terms of the MGM Mirage proposal asked Mandalay shareholders to bear a far disproportionate share of the risk. It is not in the best interest of Mandalay shareholders," Glenn Schaeffer, president and chief financial officer of Mandalay Resort Group, said yesterday in a statement.

A week of intense negotiations stalled yesterday when MGM Mirage declined to raise its offer but a source close the negotiations said the "deal killer" was an early morning email sent yesterday to Mandalay from MGM Mirage requesting a 15-month option to pull out of the deal. During that time, Mandalay would be prevented from making any financial or strategic moves, the source said.

Mandalay's board met and voted against the proposal early yesterday. The company was also concerned because of regulatory issues that could force the possible sale of casino properties, which would affect the economics of the deal.

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MGM Mirage could not be reached for comment.

MGM, whose properties include the MGM Grand Hotel and Casino and Bellagio, surprised the market by going public with the offer on June 4 amid friendly, but unsolicited, talks with Mandalay.

Investors sent Mandalay shares surging, in anticipation of a better offer from MGM or another bidder, but neither surfaced.